Those of you who have worked in small and large organizations have a much better appreciation for how fundamentally different large companies are from small ones. Each has its strengths, and the savvy small business owners understand these and take advantage of them aggressively.

The top 5 advantages of small businesses include: 

 Advantage #1: Connecting People to Purpose

The best performing team members want to belong to an organization that's on a meaningful mission - and, they need to see how their efforts contribute to that mission.

Small businesses have an enormous advantage (over larger enterprises) in their ability to help people connect to the mission and purpose of their organization - AND enable them to see what they're doing is contributing to that purpose, in a meaningful way.

Looking for a competitive advantage over larger enterprises in your same industry? Since you can't out-spend them or out-research them - how about considering to "out-purpose" them, by connecting all of your team members to the mission, vision and purpose of your organization.

 Advantage #2:  Effective Communications

"The biggest problem with communication is the illusion that it has taken place."

The larger the organization is, the greater this illusion becomes. As organizations grow, communication challenges grow as well. In fact, they grow dramatically faster (exponentially) than the organization headcount does.

To illustrate:
  • In an organization with 3 people, there are only 3 possible different interactions.
  • In an organization with 25 people (8x as many people), there are 300 possible different interactions = 100x increase in the complexity of communications
  • In an organization with 100 people (33x as many people), there are 4,950 possible different interactions = 1,650x increase in the complexity of communications
Growing organizations respond to increased complexity by creating layers (business units, divisions, departments, teams, groups, etc.). Add to this challenge: 55% of communication really takes place through non-verbal body language (not phone, not texting, not email, not IMs, not video conferencing.)

Advantage #3:  Timely Decision-Making
  
Decision-making is dramatically different in smaller organizations, as compared to much larger enterprises. As organizations increase in size, the leadership team moves generalists to specialists who are responsible for a particular business area or function.

Because top decision-makers in larger organizations are more insulated from day-to-day activities of the company, they no longer have the first-hand knowledge to make decisions without the input of several other specialists.

The result? Slower and often lower-quality decisions. In smaller businesses however, there are fewer decision-makers, and they're so close to customers, employees, suppliers and daily operations, they can get a much more accurate sense of whether a decision is right or wrong (.....and can get this sense much quicker.)

Advantage #4:  Customer Intimacy 

In smaller organizations, a much greater percentage of team members work with customers directly.

This includes the leaders in the organization, who frequently are still involved in closing sales or supporting clients. This kind of closeness to customers means the people in the company know customer issues and they can spot changing market needs earlier.

 In smaller organizations, decision-making is more timely, and both team leaders and team members can execute on those changing market trends earlier.

Advantage #5:  Attracting Team Members 

Small businesses don't have to take a back seat to larger organizations when recruiting top people. The small business advantages already discussed:
  1. Connecting people to purpose
  2. Effective communication
  3. Timely decision-making
  4. Customer intimacy
....when explained very carefully to all candidates, can provide a great draw to the most talented prospects.

BOTTOMLINE: It's important to recognize that many people who haven't worked in large companies may not understand these advantages. Yet for people who are experienced in larger organizations, the advantages will be obvious - and often quite welcome.

Small businesses aren't necessarily better than large businesses - they're just different. Learning to leverage the differences is what competitive advantage is all about.